The hunt for corporate superman

News Analysis: Headhunters are struggling to fill a growing list of chief executive vacancies. As the pressure for value intensifies, is too much being asked of the people at the top?
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THE SHOCK departure of Dick Brown, Cable & Wireless chief executive, highlights an alarming gap at the top of UK plc.

Even before the announcement last week that Mr Brown was leaving to become chairman and chief executive of EDS, the Texas-based information technology company, headhunters were working overtime to fill a rare spate of chief executive vacancies. Barclays Bank, leisure group Rank, entertainment company EMI and the Anglo-Dutch publisher Reed-Elsevier are all - for a variety of reasons - also looking for chief executives.

Is this glut of openings just a coincidence? Or is it symptomatic of a shift in the way our biggest companies are run?

Observers are divided. Elisabeth Marx, a director of executive search consultancy Norman Broadbent International, maintains it is fairly normal for there to be a number of vacancies at this level, not least because of the difficulty of finding the right person for an increasingly demanding job. "They are special people. There's only a small number to choose from," she says - a reference to the belief that today's chief exec must be a superhuman combination of master strategist, inspirational leader and powerful communicator.

Business schools are supposedly putting great effort into developing such skills, but the pool shows little sign of growing. This means that their scarcity value must be reflected in their pay. Research by Monks Partnership, the remuneration specialists, reveals that last year 20 company directors enjoyed earnings of more than pounds 1m. As one consultant says, the pressure members of this "elite group" are under is compensated for by the fact that "if you succeed you do extremely well".

Many now detect a conspiracy to ratchet up pay through an insistence on a broad range of skills and a conviction that growing internationalisation requires expertise typically possessed by already highly-paid US executives such as Mr Brown. There is always an exception to prove the rule, and Sir Colin Southgate, the EMI chairman, failed in his bid to install Jim Fifield, the high-earning American who headed EMI Music as chief executive, when the company's non-executive directors objected.

Nevertheless the headhunters and chief executives gain from the view that the solutions lie in other companies or even sectors rather than within - as with football clubs, where whenever a managerial vacancy arises the same list of candidates is circulated.

This is partly a development of the old British "gifted amateur" approach so prevalent in the Civil Service and elsewhere. But it also owes something to the conviction that modern business needs visionaries who are not blinkered by working for one organisation.

But, as Dr Marx points out, the chief executives of the most admired companies are more likely to stay with their companies, and to have the loyalty they regard as so vital in employees. Such companies tend to go in for well-managed succession planning, so that even if there is a shock departure, someone else can be eased in. Companies that appear rudderless when a chief executive leaves only reinforce the notion that they are run by single all-knowing god-like figures.

Nevertheless, chief executives are staying in position for less time than they used to. Research in the US shows that the tenure of chief executives is getting shorter, and anecdotal evidence suggests the same is true in Britain. This is partly because managers are rising to the posts at a younger age and so are more inclined to move on. But it is also connected with a sea change in the length of time institutions allow executives to produce the goods.

Pressure from institutional shareholders is rising. Phillips & Drew, the fund management arm of UBS, was instrumental in the departure from retailer Sears of chief executive Liam Strong and has pressed for the break-up of the group. It has offered its views on various mergers, including the proposed link between BTR and Siebe. Shareholder pressure was behind the departure in October of Andrew Teare from Rank. He was credited with focusing the company, but a profit fall of 20 per cent was enough to seal his fate.

Jerzy Wielechowski, P&D's head of corporate governance, said last week: "The timescale has shortened as the fund management industry has become more active."

A key tool in the activism shown by P&D and other fund managers has been "shareholder value", derived from the Economic Value Added concept developed by consultancy Stern Stewart. Philips, the electronics group, Kodak, the photographic company, and glass maker Pilkington are among the most notable organisations that passed the baton from one chief executive to another in an effort to return to past glories.

But if the pressure to perform can be particularly acute in struggling organisations, it is never absent from successful ones. The modern business climate is so unforgiving that today's success can be tomorrow's business school case study in complacency.

And many in the City of London and beyond believe this is deterring some talented individuals from putting themselves forward. Put simply, even though the rewards may be huge, there will be some highly competent people not prepared to put themselves forward for such positions.

This might be due to a concern to have a fuller, more balanced life, but it is also down to a growing realisation that achieving turnarounds is difficult, and not solely dependent upon the abilities of the individual assuming the chief executive role. It is thought this is why De La Rue took so long to find a new chief.

More emphasis is now put on the balance of boards. Although many chief executives crave the absolute power of their counterparts in the United States, there is also a growing belief in the need for other directors to share the responsibilities, simply because no one person can have all the required skills.

This is a tricky area; board interference is thought to have been an important factor in Martin Taylor's decision to leave Barclays. But unless companies find a way of negotiating round it, that list of vacancies will get longer.